Costco Wholesale Corporation Q1 FY26 Earnings Analysis

- Costain has a record forward work position of GBP 7 billion, up 30% year-on-year, representing over 6 times current revenues, underpinning growth for 2026 and beyond. - 90% of work for 2026 is already secured, providing strong confidence in meeting 2026 expectations. - Significant growth expected in 2027 driven mainly by increased volumes, especially from: - Water sector entering AMP8 delivery phase with investment doubling compared to AMP7. - New road contracts ramping up to full delivery. - Growth in aviation work, including new frameworks at Gatwick Airport. - Large nuclear energy contract at Sellafield. - Margins expected to normalize around 4% in 2026 and 2027, with continued ambition to reach 5% industry-leading margins. - Overall, future growth is volume-driven with consistent, solid margins and improved contract portfolios.

- Costain expects a step change in performance starting in the 2027 financial year, driven mainly by increased volume of work and new contract wins. - They have already secured 90% of work for 2026, with GBP 2.4 billion worth of forward work for that year, giving high confidence in hitting 2026 targets. - Growth in water sector (moving from design to delivery phase in AMP8), new road contracts, and expanding aviation and nuclear contracts (e.g., Sellafield) will drive earnings growth in 2027. - Margins are expected to normalize around 4% for 2026 and 2027, still industry-leading, with a clear ambition to reach 5% margins longer term. - The company delivered a 9% growth in operating profits to GBP 47.1 million in 2025 and aims for increased shareholder returns supported by strong cash generation. - Overall, Costain signals confidence in continued revenue and profit growth from its strong contract portfolio and market positioning.

- Costain Group PLC is positioned to benefit from committed investments in essential critical infrastructure in the UK. - The UK government’s national infrastructure strategy plans GBP 725 billion investment over 10 years, with a recently updated infrastructure pipeline confirming committed investment. - Costain has a record forward work position of GBP 7 billion (over 6x revenues), supporting growth in 2026 and a step change in 2027. - Growth is driven by water sector projects moving from design (2025) to delivery (2026-27), with AMP8 investment double that of AMP7. - Other key areas of growth include new road contracts, expanding aviation frameworks (notably Gatwick Airport), and a significant nuclear energy contract at Sellafield. - The company emphasizes long-term, non-discretionary investments tied to government and regulatory commitments to ensure stable, strategic project pipelines.

- There is no mention of any current or future fundraising through debt or equity in the Q&A session. - Costain Group PLC has no borrowings; they hold cash, which benefits from higher interest rates. - The company has strengthened its balance sheet and increased returns to shareholders via dividends and a GBP 20 million share buyback program (their third). - The focus is on strong cash generation from operations rather than raising new funds. - No indications or plans were disclosed regarding raising capital through new debt or equity issuance.

- Costain Group PLC has a record forward work position of GBP 7 billion, up 30% in the year. - This forward work position represents over 6 times their revenues. - They have secured 90% of their work for 2026, providing confidence in delivery. - Forward work for 2026 includes GBP 2.4 billion worth of projects. - The order book contains a growing portfolio including water (AMP8 phase), new road contracts, aviation frameworks (including two for Gatwick Airport), and a large Sellafield nuclear energy contract. - The long-term framework projects have been structured with a focus on balanced risk-sharing with customers.